Republicans to grill Treasury Secretary nominee

Feb. 13, 2013
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President Obama shakes hands Jan. 10 with White House Chief of Staff Jack Lew in the East Room of the White House in Washington, after he announced that he will nominate Lew as the next Treasury Secretary. / Charles Dharapak, AP

by Paul Davidson, USA TODAY

by Paul Davidson, USA TODAY

Treasury secretary-nominee Jack Lew is expected to face questions from Senate Republicans Wednesday about his tenure at Citigroup during its downward spiral amid the 2008 financial crisis and his investment in a Cayman Islands fund.

Political analysts say the grilling will make for a tougher confirmation hearing than White House officials initially anticipated, but Lew, President Obama's former chief of staff, should be easily confirmed by the Democratic-controlled Senate. He would succeed Tim Geithner, who resigned last month.

"Is (Lew) in more or less trouble than (Defense secretary nominee) Chuck Hagel?" says William Galston, senior fellow at the Brookings Institution. "A whole lot less, based on what we now know."

Republicans on the Senate Finance Committee are expected to ask Lew about his role as chief operating officer of a troubled Citigroup investment unit during the financial crisis.

"If taxpayers are going to prop up failed banks, they have a right to know what a key executive like Mr. Lew did at that time," Sen. Orrin Hatch, R-Utah, the committee's ranking Republican, said in a statement.

"How do you deserve a $940,000 bonus?" Grassley said in an interview. "It's kind of a moral and ethical issue." In a statement, he added that "the Treasury secretary can't owe anyone on Wall Street any favors."

Grassley also plans to ask Lew about his investment in a Citigroup venture capital fund based in a Cayman Islands building that Obama has assailed as a haven for tax dodging. Lew invested $56,000 in the fund and sold it in 2010 for $54,418.

In a 2009 speech, Obama called the building, the Ugland House, either "the largest building in the world or the largest tax scam." And an Obama campaign ad last year accused Republican candidate Mitt Romney of stashing millions of dollars in the Cayman Islands.

"(Lew) had his money there and it's something that Obama ridiculed Romney about and it was wrong," Grassley said. "One word would be hypocrisy. I think there's a double standard."

White House spokesman Eric Schultz said in an e-mail, "Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment on his tax returns."

Before he became chief of staff last year, Lew, 57, served as director of the Office of Management and Budget under both Obama and President Clinton and as deputy secretary of State under Obama.